unitednations re: social security eligibility

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dot70

New Member
United Nations and other gurus--
Just a couple of questions vis-a-vis meeting eligibility for social security. These questions pertain to those currently working with a work permit (H1-B, etc.) who contribute toward social security via Fica deductions:

1. is the minimum period 10 years to be eligible for social security at age 65?
2. does the period of work via an H1B visa (for example) count toward the 10-year period, or does the clock start after a green card approval?
3. if I will be eligible for old age security pay from another country, how is that factored in vis-a-vis social security payments in the US?
4. if at the age of 65 and after, I don't reside in the US, will I be able to receive social security (provided I have met eligibility criteria) if:
a) I am a US citizen ?
b) if I am not a US citizen?

Thanks.
 
Tricky question on 40 earning credits

Hi,

I have been doing some reading on similar topics. The eligibility for SS benifits is "10 years AND 40 earning credits" or "10 years OR 40 earning credits". Reason is we get 1 credit for each $900 earned with a maximum of 4 credits each year. Since most of us earn more than $3600 (before tax) each month, we fulfill the credit requirement in first month itself of the year. So will we get SS benefits in following scenario?

I work for 6 full years in US. So I earn 24 (6*4) credits. Then I move out of US and for next 4 years I come back to us for 1-2 months each year and leave after earning $4000 ( i.e. 4 credits). So in the 4 years I will be working only 1-2 months in US but still earning 4 credits each year and hence I will have 40 credits at the end of 10 years.

Thanks
 
LaborSubs said:
I work for 6 full years in US. So I earn 24 (6*4) credits. Then I move out of US and for next 4 years I come back to us for 1-2 months each year and leave after earning $4000 ( i.e. 4 credits). So in the 4 years I will be working only 1-2 months in US but still earning 4 credits each year and hence I will have 40 credits at the end of 10 years.
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I believe so. The neat thing about SS and the treaties the US has is that if you leave the US and spend those next 4 years in Canada you will qualify for SS, although at a greatly reduced amount. This quarter I became eligible for SS since I now have 40 quarters between Canada and the US; although all of my quarters in Canada are treated as "0" for the purposes of benefits.

The trick is to work and settle in one of the countries where the US has a totalization agreement.
 
Social Security btwn US and Canada

Thank you very much unitednations for an in-depth response. Just to clarify one of the questions--

I am a Canadian citizen. Under the scenario that my green card does not go through (I am currently waiting for a CP interview and I have worked in the US for 5 years), if I go back to Canada and then come back at some later point to fullfill the 10year/40 credit requirement for social security, I will become eligible, right?

Incidentally, if I will be eligible for social security both in the US and Canada, would I receive 2 payments, i.e., from both countries?

Thanks.
 
dot70 said:
If I go back to Canada and then come back at some later point to fullfill the 10year/40 credit requirement for social security, I will become eligible, right? Incidentally, if I will be eligible for social security both in the US and Canada, would I receive 2 payments, i.e., from both countries?
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I believe you would only collect from one (wherever you live), based on time of service between the two countries. Really, the extra credits you earn in the other country will only be of value (since they are a credit for a quarter only, with a 0 amount) in building up the 40 quarters of eligibility.

If you already have 40 quarters in a single country, it won't do much for you. The US/Canada Tax Treaty has a lot of other provisions for taxation rates, clawbacks and 'windfall elimination' that are hideously complicated for my little brain.
 
Thanks

unitednations, realcanadian -- thanks a lot for your insights on this matter and for saving me a lot of time researching this.
 
unitednations said:
Realcanadien, I believe the scenario which you are discussing is where one does an inter-company transfer (ie., L-1). If one uses this visa then I believe they have a choice of which country they want the social security deposited to. If you decided you wanted it to go to canada then the employer wouldn't deduct social security and you would remit it to Canada and vice versa.
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No, that's something seperate. The Tax Treaty allows a transferee to contribute to the other country for up to five years, designed under the assumption that they would be returning back and want to keep the contrubtions in one country to avoid totalization between the two (which ends up being not as good).

I had some folks doing this when I worked for a Canadian company, they were operating under the assumption that both SS and CPP would go broke before they retired so they might as well contribute to the plan with the lowest rates. :)

Totalization is something completely different; you don't need to be on an L-1 to "benefit", but again, it's a dubious benefit. You're far better off getting the 40 credits in the US, and after 15-20 years even if you don't count the Canadian contributions you're about the same.
 
It is a lose-lose situation

Guys,

Unless you plan to stay in US forever, it is a lose-lose situation for you. Here are the different scenarios if you leave USA.

1. If you have less than 40 earning credits and you go to a country that does not have Social Security agreement with US (like India), you don' get any SS benefits.
2. If you have less than 40 credits and you go to a country that has SS agreement with USA (like Canada), you may use you work in Canada to become eligible for US SS benefits but it will be greatly reduced.
3. If you have 40 earning credits and then you leave US and go to a country that has a SS agreement with USA (like Canada) then also there is something called windfall elimination and your SS benefit in US will be reduced to less than half.
4. Now if you have 40 earning credits and you go to a country that does not have SS areement with USA (India), you will get US SS benefits. This is the good solution.

Best of luck.
 
unitednations said:
Thanks for the information. If we have to rely on social security later in life, we would be in trouble. Discuss with most americans and they will tell you that nothing will be there once we reach that age.
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Well, I think we're too cynical.

It used to be that many Americans retired on little more than SS and were able to make ends meet. I don't think that's going to happen for our generation. At the same time, I think that SS is still going to be there when we retire, although I suspect that a) benefits will be reduced, b) eligibility age will increase or c) both. (C is most likely).

The sensible solution is to plan for retirement on a number of fronts. Save in your IRA/401k/etc, pay off your mortgage and have some savings outside of all this. If you do this, then you may find that your savings give you 90-95% of what you need for retirement and whatever SS gives you is a nice bonus that can either increase your standard of living or allow your savings to last that much longer.

The only negative thing that I can think of is that you may have to declare other earnings and if one is collecting multiple pensions or other sources of income then it may reduce the benefit to you.
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That would be most likely. Again, your best bet is to assume that SS will be minimal and rely on your own savings. You will find that SS will be a nice reward for you when you retire provided you have looked out for yourself and been sensible in your own saving.

Most American baby boomers at 50 have less than $50,000 saved up.
 
Not a retirement planning exactly

Friends,

My reason for thinking about SS benefits is not exactly to plan for retirement. Reason is, I have worked in US for 6 years and thereby contributed around $28K towards SS. Now my employers have also contributed the same amount making it $56K. With interest etc, I beleive the current amount in my SS account could be anything between 60-70 K. I am planning to move to UK in near future and I simply don't want to forego the 60-70 K that belong to me.

I haven't researched this in a long time; but what happens if a person claims CPP from Canada, SS from USA but is a citizen or living in a third country with no agreement.
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I don't know about CPP from Canada but the person will get SS from USA if he has earned 40 credits either in USA or by taking the work credit from Canada. His SS benefit may be reduced depending on a number of factors which I mentioned in previous message.

The only negative thing that I can think of is that you may have to declare other earnings and if one is collecting multiple pensions or other sources of income then it may reduce the benefit to you.
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True. You have to declare other earnings even if you are staying in USA.

Again, your best bet is to assume that SS will be minimal and rely on your own savings. You will find that SS will be a nice reward for you when you retire provided you have looked out for yourself and been sensible in your own saving.
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This is also true but it also depends on where you are going to settle at the time of retirement. e.g. if you are in India at the time of retirement, meagre $500 pm SS benefit (in terms of today's dollar value) amounts to INR 23,000 which is not a bad amount to live decently for a retired person who has managed to build a house.
 
LaborSubs said:
I am planning to move to UK in near future and I simply don't want to forego the 60-70 K that belong to me.
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I think you misunderstand the notion of Social Security. That money doesn't belong to you. It never has and never will. SS is a "pay as you go" system, so you may or may not get something back based on contributions and laws, but don't assume you have that much money in your "account".
 
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